Cement Distributors Inc. v. Nies - Breach of Fiduciary Duty

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April 13, 2026 Get Citation Alerts Download PDF Add Note

Cement Distributors, Inc., Res/cross-app. V. Gordon E. Nies And Kay L. Nies, Apps/cross-res.

Court of Appeals of Washington

• Citations: None known
• Docket Number: 87723-2

• Precedential Status: Non-Precedential

• Opinion

• Authorities (36)

• Cited By (0)

• Summaries (0)

• Similar Cases (11K)

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Lead Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

CEMENT DISTRIBUTORS, INC., a
Washington corporation, No. 87723-2-I

Respondent/Cross Appellant, DIVISION ONE

v. UNPUBLISHED OPINION

GORDON E. NIES, individually, and
the marital community comprised of
GORDON E. and KAY L. NIES,
husband and wife,

Appellants/Cross Respondents,

HAZELRIGG, C.J. — Gordon Nies appeals and Cement Distributors Inc. (CDI)

cross appeals from the judgment entered by the trial court following a bench trial

where it found Nies breached his fiduciary duty as chief financial officer of CDI by

filing false tax forms with and failing to transfer funds withheld from employee

paychecks to both the Internal Revenue Service and the Canada Revenue

Agency. The parties each contend that the trial court committed various errors

related to its interpretation of an agreement transferring Nies’ shares back to CDI.

Because the trial court so erred, we reverse and remand for further proceedings

consistent with this opinion.
No. 87723-2-I/2

FACTS

Gordon Nies was the chief financial officer (CFO) of Cement Distributors

Inc. (CDI) from 1994 until his resignation in 2015. 1 Nies held “an approximate 5

percent interest of shares in CDI.” The other shares were held by members of the

Walden family and one other CDI employee who, like Nies, was not a member of

the Walden family, and were governed by the “Shareholders’ Agreement.”

Nies, in his capacity as CFO, “submitted false Form 940 and 941 tax returns

on behalf of CDI for the years 2006, 2008, 2011, and 2012, thereby making CDI

liable to pay back taxes, interest, and penalties. He did not inform the other

members of CDI that he was doing this.” Nies withheld money from employee

paychecks for Medicare and Social Security contributions, but the “withheld pay

was never delivered to the Internal Revenue Service (IRS) to satisfy any CDI tax

obligations. Mr. Nies also failed to pay tax debts to the Canadian Revenue Agency

(CRA) during the same period” and, critically, failed to inform others at CDI as to

this failure.

Bruce Walden, chief executive officer (CEO) of CDI, became aware of these

facts when the IRS sent him a notice of outstanding tax debt on July 24, 2015.

Nies submitted a letter of resignation to Walden on July 30 which simply stated,

Because of the hardship I’ve caused you and CDI, it’s not in the best
interest of you or me to continue my employment.
I am sorry I violated your trust in me after all these years together,
you’ve always supported me in everything and I failed you. I have
no credible reason or excuses for my actions, you deserved much
better from me.

1 The following facts are drawn from the unchallenged findings of fact entered by the trial

court following the bench trial, unless otherwise noted.

-2-
No. 87723-2-I/3

Over a year later, in September 2016, Nies met with Walden “to discuss the

termination of Mr. Nies’ interest in CDI as a shareholder.” At trial, Nies and Walden

offered differing testimony about what was discussed as to Nies’ ongoing liability

to CDI for issues relating to the unpaid taxes. Walden asserted that “he never

discussed releasing Mr. Nies from liability, but Mr. Nies testified that, at that

meeting, they specifically discussed that Nies would ‘be relieved of any future

liabilities’ in exchange for returning his shares to CDI.” 2 The court, however, noted,

“Walden testified that he told Nies he didn’t deserve the shares, that Walden never

told Nies that Walden would release Nies from liability or any claim for damages,

and that Nies never said anything about a release.”

Shortly after his meeting with Walden, Nies met with counsel for CDI, Larry

Trivett, on September 21 to discuss the transfer of his shares back to CDI. Trivett

would later testify that they “did not discuss a release of possible claims against

Mr. Nies or Mr. Nies’ liability resulting from CDI’s IRS [and] CRA problems.” At

that meeting, Nies signed a document titled “Transfer of Shares to Corporation”

(share transfer agreement or STA) before a notary public. While the share transfer

agreement was prepared by Trivett, it was “not signed by anyone representing

CDI.” The STA is comprised of a single sentence that reads as follows:

In Consideration of the cancellation of all obligations which I may
have, pursuant to the terms of that Shareholders’ Agreement, dated
August 31, 1996, I, GORDON NIES, hereby irrevocably convey,
transfer, release, and assign to CEMENT DISTRIBUTORS, INC.
(“CDI”), all of my shares of CDI stock, either attached hereto, or
which I may otherwise own.

2 Nies did not prepare or provide the report of proceedings from the trial as part of the

record on appeal. As such, the content and characterization of testimony in this opinion relies
solely on the trial court’s capture and characterization of testimony in its unchallenged findings of
fact and conclusions of law.

-3-
No. 87723-2-I/4

(Emphasis omitted.)

In December 2017, CDI filed a complaint that alleged several claims against

Nies individually and his marital community, 3 including breach of fiduciary duty,

fraud, indemnification and contribution, and unfair business practices, as well as a

request for forensic accounting. As relief, CDI requested a sum estimated “to be

in excess of US $1,079,646.95, and [Canadian] $299,049.72, plus additional

interest.” Nies served his answer and affirmative defenses on opposing counsel

in April 2018 but later asserted without explanation that the pleading was not filed

with the court until September 2022. In November 2023, he sought leave to file a

first amended answer and affirmative defenses. The judge entered an agreed

order granting that request on December 8, and Nies’ amended answers and

affirmative defenses were filed a few days later. Nies’ answers consisted mainly

of denials, although he did assert an affirmative defense for offset: “If not a

settlement of debts, [Nies] is still entitled to a setoff of the value of the Shares

transferred to [CDI] through the September 21, 2016, Transfer of Shares to

Corporation in an amount to be determined at trial.”

Nies filed a motion for summary judgment and supporting declaration in

March 2024 after substituting his trial counsel. Nies’ motion argued that CDI’s

complaint should be dismissed because the transfer of his shares back to CDI

released him from all claims under the terms of the Shareholders’ Agreement and

3 While CDI brought suit and the judgment after trial was ultimately entered against Nies,

individually and as his marital community, we collectively refer to Nies, his spouse, and marital
community as “Nies” for clarity.

-4-
No. 87723-2-I/5

the STA and, thus, he had been discharged from liability for the tax debt and

penalties that CDI had incurred as a result of his conduct.

CDI opposed summary judgment and asserted that Nies had only been

released from obligations set forth in the Shareholders’ Agreement and, even then,

only a limited subset of his obligations under that agreement. CDI specifically

contended that Nies was freed from his obligation “to specify the price at which he

would offer his shares in CDI first to the Corporation, and then if it was not willing,

then to the ‘Offeree Shareholders.’” CDI averred that when it accepted the return

of Nies’ shares, “Nies was released from that obligation, and no other.” CDI’s

motion was substantively supported by a declaration from Walden in his capacity

as CEO, Walden’s daughter Lynn Wise, and another shareholder who had worked

under Nies at CDI.

On April 5, the trial court entered an order that denied Nies’ motion for

summary judgment. The court also denied CDI’s motion to strike as hearsay a

letter Nies had attached as an exhibit to his motion. On April 15, Nies sought

reconsideration of the trial court’s order and asserted that the trial court had “made

a clear legal error. The legal analysis for denying summary judgment was flawed

because it sought to allow extrinsic evidence to interpret the subject Release,”4 the

application of which, he averred, should have resulted in the dismissal of CDI’s

claim. CDI opposed reconsideration and contended that “the [c]ourt did not

improperly consider extrinsic evidence in its ruling” and, further, Nies “failed even

to identify what ‘extrinsic evidence’ the [c]ourt supposedly considered improperly.”

4Consistent with his argument as to its interpretation, Nies referred to the STA as a
“release” or “waiver” in pleadings before the trial court and on appeal.

-5-
No. 87723-2-I/6

CDI also reiterated its interpretation of the STA. The trial court denied

reconsideration on April 25, 2024.

A bench trial was conducted on May 20, which consisted of testimony from

Wise, Trivett, Nies, Jonathan Walden, and Lewis Walden. 5 The trial court entered

its finding of facts and conclusions of law several months later in August. Essential

to the present appeal, it found that Nies breached the duty of good faith he owed

to CDI, the share transfer agreement excused Nies from liability in consideration

for CDI foregoing its claims against him and the return of the shares, the STA was

void as against public policy, and Nies was entitled to an offset for the value of

shares that he had transferred to CDI. The trial court also ordered that “CDI shall

submit a judgment against Mr. Nies in the principle [sic] amount of $233,957.59,”

which was the amount attributable to Nies’ breach after an offset for the value of

the transferred shares had been subtracted. The trial court found that CDI had

failed to prove on a more probable than not basis that Nies had appropriated CDI’s

funds for his own benefit.

On August 26, Nies sought reconsideration of “the [c]ourt’s conclusion of

law that the waiver agreement between himself and Cement Distributors, Inc.

(“CDI”) was rendered unenforceable on public policy grounds.” He argued that the

court erred because

public policy also strongly favors settlements, and the evidence
presented at the trial demonstrate[d] that, at the time CDI and Nies
entered into the waiver agreement more than a year after Nies
resigned, CDI had full knowledge of any and all information Nies
could have disclosed, as well as the legal consequences.

5 Because a report of proceedings from the bench trial was not provided in this appeal, this

list is compiled from the trial minutes included in the clerk’s papers.

-6-
No. 87723-2-I/7

CDI opposed reconsideration on the grounds that there was “no basis to conclude

that . . . Nies [had] fulfilled the demanding standard of CR 59(a)(7), which require[d]

Nies to establish that ‘there [wa]s no evidence or reasonable inference from the

evidence to justify the verdict or the decisions, or that it [wa]s contrary to law.’”

The trial court denied Nies’ motion for reconsideration and entered

additional findings. These included that Nies had “admitted wrong-doing and

apologized in his letter of resignation to Mr. Walden” but also that he never

disclosed the amount owed or the debt to the CRA, along with a series of findings

that were essentially a timeline of corroborating events regarding Nies’ incomplete

disclosures about his handling of the United States and Canadian tax issues to

any officer of CDI.

Nies timely appealed, and CDI timely cross appealed.

ANALYSIS

I. Denial of Summary Judgment Not Reviewable After Trial

Nies first avers that the trial court erred when it denied his motion for

summary judgment because it considered “extrinsic evidence” when it construed

the share transfer agreement and found genuine issues of material fact that

precluded summary judgment. CDI asserts that we should decline review of the

challenged order due to the “general rule” that “an order on a motion for summary

judgment is no longer reviewable once a case has gone to trial” and because Nies

failed to provide us with the necessary report of proceedings for review. In reply,

Nies contends that we can review the summary judgment order because it solely

concerned questions of law.

-7-
No. 87723-2-I/8

Summary judgment is governed by CR 56. The trial court will grant a motion

for summary judgment if the moving party establishes “that there is no genuine

issue as to any material fact” and it is “entitled to judgment as a matter of law.” CR

56(c). We review the trial court’s summary judgment order de novo. Greensun

Grp., LLC v. City of Bellevue, 7 Wn. App. 2d 754, 767, 436 P.3d 397 (2019). There

is a genuine issue of material fact if “‘reasonable minds could differ on the facts

controlling the outcome of the litigation.’” Messenger v. Whitemarsh, 13 Wn. App.

2d 206, 210, 462 P.3d 861 (2020) (quoting Dowler v. Clover Park Sch. Dist. No.

400, 172 Wn.2d 471, 484, 258 P.3d 676 (2011)). Washington courts have “held

that ‘an order denying summary judgment, based on the presence of material,

disputed facts will not be reviewed when raised after a trial on the merits.’” Leitner

v. City of Tacoma, 15 Wn. App. 2d 1, 18-19, 476 P.3d 618 (2020) (quoting Johnson

v. Rothstein, 52 Wn. App. 303, 306, 759 P.2d 471 (1988)). There is an exception

for decisions that “turned solely on a substantive issue of law.” Id. at 19.

Here, our review of the summary judgment order is precluded. The issue

at the heart of the summary judgment motion was the resolution of the competing

interpretations of the share transfer agreement presented by the parties,

specifically whether it operated as a release of any and all liability for Nies’ conduct,

and the court considered several declarations in reaching its ruling. The mere fact

the motion for summary judgment was denied, viewed within the context of the

plain language of CR 56 regarding a genuine issue of material fact, supports our

conclusion that the trial court’s ruling that denied the motion was based on a

determination that resolution of those material facts was required. See Kaplan v.

-8-
No. 87723-2-I/9

Nw. Mut. Life Ins. Co., 115 Wn. App. 791, 799, 65 P.3d 16 (2003) (“A summary

judgment denial cannot be appealed following a trial if the denial was based upon

a determination that material facts are disputed and must be resolved by the

factfinder.” (quoting Brothers v. Pub. Sch. Emps. of Wash., 88 Wn. App. 398, 409,

945 P.2d 208 (1997))). Nies’ framing of this assignment of error in his opening

brief suggests he agrees with this assessment as he argues, “The trial court . . .

denied summary judgment . . . in part relying upon extrinsic evidence in the form

of the [t]estimony of Lynn Wise and Bruce Walden to find that material issues of

fact precluded summary judgment.” However, such concession is fatal to this

assignment of error as a denial of a motion for summary judgment based on the

existence of competing facts, not one that “turned solely on a substantive issue of

law,” is plainly not reviewable after trial. See Leitner, 15 Wn. App. 2d at 19.

Perhaps more critically, Nies fails to cogently explain what relief we could possibly

grant on this assignment of error given that the result of this ruling was that he had

a trial on the issue and was able to fully develop his argument there. Accordingly,

we decline to reach the merits of this issue.

II. Challenges to Findings of Fact and Conclusions of Law

Nies next assigns error to a number of findings of fact and conclusions of

law entered by the court after the bench trial. Specifically, he challenges I-14, A-

3 through A-5, A-7, A-10, E-6 through E-8, and E-10 through E-12. 6 CDI assigns

6 Notably, while the document is captioned “Findings of Fact & Conclusions of Law After

Bench Trial,” the judge did not specifically identify which were its findings of fact and which were
its conclusions of law. However, while such clarity facilitates appellate review, it is ultimately of
little import as we consider findings and conclusions based on their substance and not their label.
See In re Est. of Haviland, 162 Wn. App. 548, 561, 255 P.3d 854 (2011).

-9-
No. 87723-2-I/10

error to E-2 through E-5. However, as with his assignment of error regarding the

denial of summary judgment, Nies both fails to engage with the proper standard of

review for such a challenge and to provide a sufficient record on appeal.

We review “a trial court’s decision following a bench trial by asking whether

substantial evidence supports the findings and whether the findings support the

court’s conclusions of law. Casterline v. Roberts, 168 Wn. App. 376, 381, 284

P.3d 743 (2012). “‘Substantial evidence to support a finding of fact exists where

there is sufficient evidence in the record to persuade a rational, fair-minded person

of the truth of the finding.’” Herdson v. Fortin, 26 Wn. App. 2d 628, 636, 530 P.3d

220 (2023) (internal quotation marks omitted) (quoting Hegwine v. Longview Fibre

Co., 162 Wn.2d 340, 353, 172 P.3d 688 (2007)). “If the standard is satisfied, a

reviewing court will not substitute its judgment for that of the trial court even though

it might have resolved a factual dispute differently.” Sunnyside Valley Irr. Dist. v.

Dickie, 149 Wn.2d 873, 879-80, 73 P.3d 369 (2003). In a practical sense, that

means that we do not consider whether the evidence could support an alternate

finding, only whether the finding made by the trial court is properly supported. In

so doing, “[w]e ‘view the evidence in the light most favorable to the prevailing party’

and do not ‘reassess the credibility of trial court witnesses.’” Herdson, 26 Wn. App.

2d at 636 (quoting Garza v. Perry, 25 Wn. App. 2d 433, 453, 523 P.3d 822 (2023)).

“Unchallenged findings are verities on appeal. Jensen v. Lake Jane Ests., 165

Wn. App. 100, 105, 267 P.3d 435 (2011).

Before applying the foregoing law regarding substantial evidence review of

findings of fact, we must parse out which of the determinations by the trial court

• 10 - No. 87723-2-I/11

Nies challenges are findings of fact (FF) and which are conclusions of law (CL). I-

14 is a finding of fact wherein the trial court weighed the credibility of the various

witnesses who testified at the trial. A-3 and A-5 are CLs, which are subject to de

novo review, A-7 and A-10 are FFs which we review for substantial evidence, and

A-4 is mixed. E-6, E-7, and E10 are conclusions of law, E-8 and E-11 are findings

of fact, and E-12 is ordering language that directs CDI to act.

A. Abandoned Challenges

While Nies acknowledges in his opening brief that we apply the substantial

evidence test to assignments of error that challenge findings of fact, he does not

define, much less apply, that test to the relevant portion of mixed FF/CL A-4 or FFs

A-7, A-10, E-8, or E-11. Further, as many of the challenged findings are based on

trial testimony and Nies failed to provide a report of proceedings, we could not

conduct the proper appellate review even if he had so engaged in his briefing. This

is so because “[a]n ‘insufficient record on appeal precludes review of the alleged

errors.’” View Ridge Ests. Homeowners Ass’n v. Guetter, 30 Wn. App. 2d 612,

637, 546 P.3d 463 (quoting Bulzomi v. Dep’t of Lab. & Indus., 72 Wn. App. 522,

525, 864 P.2d 996 (1994)), review denied, 3 Wn.3d 1016 (2024). It is the duty of

the appellant to designate a sufficient record for review. See id. Separately, even

if we had the report of proceedings, we would not consider his challenge to finding

I-14 as it is the trial court’s credibility determination regarding the witnesses who

testified at trial, which is expressly exempted from substantial evidence review.

See Herdson, 26 Wn. App. 2d at 636. Because Nies has not provided the requisite

record from the trial court or applied the relevant test to that record, his challenges

• 11 - No. 87723-2-I/12

to findings A-4, A-7, A-10, E-8, and E-11 are abandoned, as are his assignments

of error to conclusions A-3, A-5, E-6, E-7, and E-10.

B. Interpretation of Share Transfer Agreement

One of the challenges we can review, despite the absence of the report of

proceedings from trial, goes to the trial court’s conclusion of law 7 as to the

interpretation of the STA. Generally speaking, “[c]ontract interpretation is a

question of law that we review de novo.” Kiona Park Ests. v. Dehls, 18 Wn. App.

2d 328, 335, 491 P.3d 247 (2021). The trial court’s interpretation of the STA is

found in E-2 though E-5 in the findings and conclusions entered after the bench

trial, to which CDI assigned error in its cross appeal. CDI specifically contends

that the trial court erred when it adopted Nies’ proffered interpretation: “[T]he [t]rial

[c]ourt got lost in the weeds—by focusing solely on the placement of commas—

and lost sight of the document as a whole.” Nies avers that “the trial court properly

interpreted the parties’ agreement as drafted by CDI’s counsel, and CDI’s

arguments are insufficient to establish reversible error on appeal.” Nies is

incorrect.

We interpret a settlement agreement as we would a contract. Marshall v.

Thurston County, 165 Wn. App. 346, 351, 267 P.3d 491 (2011). Again, contract

interpretation is a question of law subject to de novo review. Kiona Park Ests., 18

7 At oral argument before this court, counsel for Nies expressly conceded that this question

involves a conclusion of law. Wash. Ct. of Appeals oral arg., Nies v. Cement Distribs., Inc., No.
87723-2-I (Jan. 15, 2026), at 2 min., 43 sec., video recording by TVW, Washington State’s Public
Affairs Network, https://tvw.org/video/division-1-court-of-appeals-2026011406.
While CDI did not expressly frame its argument on this issue as a challenge to a conclusion
of law, likely because of the absence of such designations within the findings and conclusions
prepared by the trial court, the analysis and authority presented in briefing were consistent with de
novo review of a question of law.

• 12 - No. 87723-2-I/ 13

Wn. App. 2d at 335. Washington follows the objective manifestation approach to

contract interpretation wherein we discern the parties’ intent “by focusing on the

objective manifestations of the agreement, rather than the unexpressed subjective

intent of the parties.” Hearst Commc’ns, Inc. v. Seattle Times Co., 154 Wn.2d 493,

503, 115 P.3d 262 (2005). As the reviewing court, we “impute an intention

corresponding to the reasonable meaning of the terms used.” Id. We may

consider extrinsic evidence “to determine the meaning of specific words used, but

not to show an intention independent of the instrument or to vary, contradict or

modify the words of the contract.” Marshall, 165 Wn. App. at 351. We construe

“written contracts against their drafters such that they cannot later benefit from

‘mistakes’ that they were in a position to prevent.” McKasson v. Johnson, 178 Wn.

App. 422, 429, 315 P.3d 1138 (2013).

CDI challenges the following portion of the “Waiver of Liability” section of

the findings and conclusions:

1. “A clause is said to be restrictive (or defining) if it provides
   information that is essential to understanding the intended meaning
   of the rest of the sentence. Restrictive clauses . . . are never set off
   by commas from the rest of the sentence.” Chicago Manual of Style
   § 6.27 (17th ed. 2017); See also Texas Law Review Manual on
   Usage & Style § 1.21 (15th ed. 2020). On the other hand, “[a] clause
   is said to be nonrestrictive (or nondefining or parenthetical) if it could
   be omitted without obscuring the identity of the noun to which it refers
   or otherwise changing the intended meaning of the rest of the
   sentence. Nonrestrictive relative clauses . . . are set off from the rest
   of the sentence by commas.” Id. When a comma gives a contract a
   clear and certain meaning, a court cannot, in the absence of fraud or
   mutual mistake, make a new contract by eliminating the comma.
   Peters v. Watson Co., 40 Wn.2d 121, 123 (1952).

2. Within the “Transfer of Shares to Corporation” document,
   the comma before and after the phrase “pursuant to the terms of that
   Shareholders’ Agreement, dated August 31, 1996,” operates to set

• 13 - No. 87723-2-I/14

off a nonrestrictive clause, meaning that it can be omitted without
changing the intended meaning of the rest of the sentence. That is,
“[i]n Consideration of the cancellation of all obligations which I may
have, [ ] I, GORDON E. NIES, hereby irrevocably convey, transfer,
release, and assign . . . all of my shares . . .” Ultimately, this is the
reading proposed by Mr. Nies. Without the commas, the clause
beginning “pursuant to the terms . . . ” would be a restrictive clause
that changes the meaning of “all obligations” to those that flow from
the Shareholder’s Agreement, which is the reading proposed by CDI.

1. As written, the commas as used in the “Transfer of Shares
   to Corporation” have a clear and certain effect on the contract: all
   obligations Mr. Nies has to CDI were cancelled in consideration of
   Mr. Nies transferring his shares to CDI. This court cannot give the
   contract a new meaning by removing any commas from the
   document, especially when the party proposing to do so was the
   drafter.

2. CDI argues that reading the contract in this way renders
   the clause within the comas [sic] meaningless. However, the clause
   could be read to explain the sentence that follows.

(Emphasis added) (alterations in original).

The statement in E-2 is neither a true conclusion of law nor a finding of fact,

but rather a collection of various statements from style guides regarding restrictive

and nonrestrictive clauses and commas, none of which are applied to the relevant

documents in the case at bar. E-4 and E-5 are findings of fact; E-4 captures the

trial court’s application of the style rules set out in E-2 to the STA, and E-5 merely

sets out, and then refutes, CDI’s argument on the point addressed in E-4. Only E-

3 contains a conclusion of law, that is, the trial court’s legal interpretation of the

STA.

1. Internal Inconsistency in Findings and Conclusions

As a preliminary matter, the trial court heard testimony from the parties

regarding their disputed intentions for the STA, but its analysis relied solely on the

• 14 - No. 87723-2-I/15

text of the agreement itself, particularly its technical composition. The judge’s

interpretation hinged on the operation of a comma based on grammatical rules and

explicitly relied on Peters v. Watson Co., 40 Wn.2d 121, 123, 241 P.2d 441 (1952),

for the rule that when “a comma gives a contract a clear and certain meaning, a

court cannot in the absence of fraud or mutual mistake, make a new contract by

eliminating the comma.” While interpretation of a writing “‘will typically heed the

commands of its punctuation,’” reliance “‘only on punctuation is necessarily

incomplete’” and risks distortion of the true meaning of a contract. Dep’t of Lab. &

Indus. v. Slaugh, 177 Wn. App. 439, 449, 312 P.3d 676 (2013) (quoting U.S. Nat’l

Bank of Or. v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 454 (1993)). Further,

the trial court’s findings and conclusions regarding the STA are variously internally

inconsistent and/or unsupported by the documentary record. I-10 through I-14 and

I-16 in the findings and conclusions highlight this dissonance:

1. On September 16, 2016, over a year after his resignation,
   Mr. Nies met with Mr. Walden at the Lynnwood Denny’s to discuss
   the termination of Mr. Nies’ interest in CDI as a shareholder. Mr.
   Walden testified that he never discussed releasing Mr. Nies from
   liability, but Mr. Nies testified that, at that meeting, they specifically
   discussed that Nies would “be relieved of any future liabilities” in
   exchange for returning his shares to CDI.

2. Bruce Walden testified that he told Nies that Nies didn’t
   deserve the shares, that Walden never told Nies that Walden would
   release Nies from liability or any claim for damages, and that Nies
   never said anything about a release.

3. On September 21, 2016, Mr. Nies met with Larry Trivett,
   CDI’s counsel, to arrange for the transfer of his shares back to CDI.
   During that meeting, Mr. Nies signed a document titled “Transfer of
   Shares to Corporation,” which is included within the record as Exhibit

4. Mr. Trivett testified that he and Mr. Nies did not discuss a release
   of possible claims against Mr. Nies or Mr. Nies’ liability resulting from
   CDI’s IRS & CRA problems that Mr. Nies caused.

• 15 - No. 87723-2-I/16

1. The “[T]ransfer of [S]hares to [C]orporation” was not
   signed by anyone representing CDI. However, after Mr. Nies signed
   this document, CDI took control of Mr. Nies’ thirteen shares in the
   corporation.

2. The [c]ourt has considered this testimony in light of the
   credibility issues of Mr. Nies, given the historic hiding of information
   from CDI, lying to the IRS, and general failure to disclose information.
   Because of this, the [c]ourt finds the testimony of Mr. Walden and
   Mr. Trivett more credible and finds that there was not a discussion of
   waiving claims or the liability of Mr. Nies for his actions with the IRS
   and CRA.

....

1. CDI states that the Transfer of Shares to Corporation document cancels Mr. Nies’s obligations pursuant to the Shareholder’s Agreement but is not a hold harmless agreement. To this end, Mr. Trivett, the drafter of the document, testified that the comma setting off the clause “pursuant to the terms of the [S]hareholder’s Agreement” limits that clause to “all obligations which I may have.”

(Emphasis added.) Critically here, the court carefully set out the conflicting

testimony and expressly rendered a credibility finding in I-14; the court determined

that Walden and Trivett’s testimony was credible and Nies’ was not. Further, the

court specifically found that “there was not a discussion of waiving claims or the

liability of Mr. Nies for his actions with the IRS and CRA.”

The court also found in I-13 that the STA “was not signed by anyone

representing CDI” and yet nonetheless concluded that the document operated as

a total release of liability. 8 As Nies pointed out in his briefing, “release” is defined

in the Restatement (Second) of Contracts § 284(1) (Am. Law. Inst. 1981) as “a

8 To be clear, the STA includes the term “obligations” and while the trial court used that

word in its interpretation of the STA contained in E-4 that CL is set out in section E of the trial court’s
findings and conclusions titled, “Waiver of Liability.”

• 16 - No. 87723-2-I/17

writing providing that a duty owed to the maker of the release is discharged

immediately or on the occurrence of a condition,” and comment (a) to that rule

explains, “Although no particular form is required for an agreement to discharge a

duty, the term ‘release’ has traditionally been reserved for a formal written

statement by an obligee that the obligor’s duty is discharged.” (Emphasis added.)

Nowhere in its findings and conclusions did the trial court address any law

regarding evidence of acceptance of a complete release or waiver of liability by the

obligee. Here, the trial court determined that Nies was the party who owed a duty

“to the maker of the release,” CDI, under the Shareholder’s Agreement and as a

fiduciary. Thus, under the Restatement, Nies was the obligor and CDI the obligee.

But the Restatement is not the only source for the contention that for a release or

waiver to be enforceable, there must be evidence of acceptance by the obligee.

This is because such a release or waiver “is a contract in which one party agrees

to abandon or relinquish a claim, obligation or cause of action against another

party” and “[a]s a contract, a release is to be construed according to the legal

principles applicable to contracts.” Boyce v. West, 71 Wn. App. 657, 662, 862 P.2d

592 (1993). Exculpatory clauses, as agreements regarding release of liability, “are

strictly construed and must be clear if the exemption from liability is to be enforced.”

Scott v. Pac. W. Mountain Resort, 119 Wn.2d 484, 490, 834 P.2d 6 (1992).

Critically, our state’s highest court has held that “a release must be expressly

stated and not implied.” Condon v. Condon, 177 Wn.2d 150, 165, 289 P.3d 86

(2013). The clearest “objective manifestation of [the] intent to be bound” is a

• 17 - No. 87723-2-I/18

signature. Retail Clerks Health & Welfare Tr. Funds v. Shopland Supermarket,

Inc., 96 Wn.2d 939, 944, 640 P.2d 1051 (1982).

1. Misapplication of Principles of Contract Interpretation

Separately, the trial court’s interpretation of the STA is erroneous on the

basis that it failed to apply strict contract interpretation principles. Again, we look

to the parties’ “objective manifestations of the agreement, rather than the

unexpressed subjective intent of the parties,” and apply “an intention

corresponding to the reasonable meaning of the terms used.” Hearst Commc’ns,

154 Wn.2d at 503. Further, “‘[a]n interpretation of a contract that gives effect to all

provisions is favored over an interpretation that renders a provision ineffective.’”

Kiona Park Ests., 18 Wn. App. 2d at 335 (emphasis added) (quoting Snohomish

County Pub. Transp. Benefit Area Corp. v. FirstGroup Am., Inc., 173 Wn.2d 829,

840, 271 P.3d 850 (2012)).

The trial judge erred because she appears to have accepted Nies’ argument

and incorrectly conflated two distinct terms, one of which was expressly used in

the share transfer agreement, “obligations,” and one that was not, “liabilities.”

Further, the trial court’s interpretation of the STA renders a provision ineffective.

Nies had argued in the trial court that “‘all obligations’ can only have one

interpretation—that is, each and every obligation which existed at that time.” He

then expressly conflated obligations and liabilities when he contended that “[a]t the

time of the Release, it is undisputed that CDI had known of [Nies’] potential liability

or obligation as CFO related to the under-reporting of withholding taxes.” He

repeated that contention in his opening brief and asserted that the STA “constituted

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a waiver, settlement, and release of any and all claims of CDI against Nies, as a

matter of law.” However, in so arguing, Nies ignores the standard rules of contract

interpretation which require a term that is undefined “be given its ‘plain, ordinary,

and popular meaning.’ If a term in a [contract] is undefined, courts may look to the

dictionary to determine the common meaning.” Black v. Nat’l Merit Ins. Co., 154

Wn. App. 674, 680, 226 P.3d 175 (2010) (footnote omitted) (internal quotation

marks omitted) (quoting Boeing Co. v. Aetna Cas. & Sur. Co., 113 Wn.2d 869, 877,

784 P.2d 507 (1990)). In contrast, CDI offered a dictionary definition of obligation.

Specifically, CDI explained as follows in its trial brief:

For instance, the noun “obligation” is defined to mean:

1. something by which a person is bound or obliged to do certain things, and which arises out of a sense of duty or results from custom, law, etc. 2. something that is done or is to be done for such reasons: to fulfill one’s obligations. 3. a binding promise, contract, sense of duty, etc. 4. the act of binding or obliging oneself by promise, contract, etc. 5. Law. an agreement enforceable by law, originally applied to promises under seal. B. a document containing such an agreement. Webster’s Unabridged Dictionary, Second Edition [sic].

Further, CDI argued that its interpretation reflected its intent to release Nies only

from his duties under the Shareholders’ Agreement. The Shareholders’

Agreement contains a number of provisions that control in the event a shareholder

who is not a member of the Walden family seeks or is forced to transfer their

shares, including one entitled “Other Event of Transfer” which required Nies, as a

non-relative shareholder, to “specify the purchase price per share” within thirty

days of his resignation. That would then trigger CDI’s duty under the agreement

to “provide written notice to both the Offeror Shareholder [(Nies)] and the Offeree

• 19 - No. 87723-2-I/20

Shareholders of whether it would ‘elect to purchase or decline to purchase all or

any portion of the of the Offered Shares.’” Only then could other shareholders

purchase the shares.

We agree with CDI and apply a standard dictionary definition of “obligation”

to interpret the share transfer agreement. “Obligation” as used in the STA should

be defined as a “legal or moral duty to do or not do something.” BLACK’S LAW

DICTIONARY 1288 (12th ed. 2024). This definition makes it plain that the share

transfer agreement operates to excuse Nies from otherwise mandatory courses of

action, the ones he would be bound to follow as someone who was not a member

of the Walden family as set out in the Shareholders’ Agreement, in the event he

sought to transfer his shares in CDI. In contrast to the dictionary definition of

“obligation,” Nies’ proffered synonym, “liability,” is defined as the “quality, state, or

conditions of being legally obligated or accountable; legal responsibility to another

or society, enforceable by civil remedy or criminal punishment.” BLACK’S, supra, at

1. This is a fundamentally distinct concept from the actual word used in the

STA. To read the share transfer agreement with this substitute word, as Nies did

and the trial court accepted, impermissibly rewrites it.

Another manner by which the trial court’s interpretation rewrites the STA, in

contravention of established contract principles, is its analysis of the function of the

commas that set off the clause “pursuant to the terms of that Shareholders’

Agreement, dated August 31, 1996.” On this point, after extensive consideration

of restrictive and nonrestrictive clauses, the Chicago Manual of Style, and Peters,

a case that addressed, among other things, the import of the “lowly comma,” the

• 20 - No. 87723-2-I/21

trial court determined that this clause “can be omitted without changing the

intended meaning of the rest of the sentence.” However, the omission of the

clause fundamentally changes the meaning of the STA in that the cancellation of

Nies’ “obligations” is either restricted to those “pursuant to the terms of that

Shareholders’ Agreement, dated August 31, 1996” or it is limitless. Further, in

dismissing CDI’s position on this point, the trial court stated “CDI argues that

reading the contract in this way [(without the clause)] renders the clause within the

comas [sic] meaningless. However, the clause could be read to explain the

sentence that follows.” Whether a finding of fact or a legal conclusion, this

determination is not only unsupported by the record, but it is nonsensical as the

STA is comprised of a single sentence. There simply is no “sentence that follows.”

The trial court’s interpretation of the plain language of the share transfer

agreement was erroneous. Reading the clause “pursuant to the terms of that

Shareholders’ Agreement, dated August 31, 1996” out of the STA impermissibly

rewrites it, as does the conflation of the distinct terms “obligations” as used in the

STA with Nies’ proffered alternative “liabilities.” While there are unchallenged

findings, now verities on appeal, that neither Walden nor Trivett ever intended to

release Nies from any and all liability for his conduct regarding the corporate taxes,

we need not even consider such extrinsic evidence to conclude that the STA is not

such a waiver because, as the trial court properly found, it “was not signed by

anyone representing CDI.” See Condon, 177 Wn.2d at 164; Boyce, 71 Wn. App.

at 663; Retail Clerks, 96 Wn.2d at 944. For all of these reasons, independently

and especially in combination, the findings and conclusions regarding the trial

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court’s interpretation of the share transfer agreement, E-1 through E-5, are

unsupported by the record and law and are stricken.

The document admitted in the trial court as exhibit 31, entitled “Transfer of

Shares to Corporation,” by its plain language relieved Nies of his obligations only

“pursuant to the terms of the Shareholders’ Agreement, dated August 31, 1996.”

By signing the STA, Nies “irrevocably convey[ed], transfer[ed], release[d], and

assign[ed]” all of his CDI shares as consideration for his relief from his obligations

under the Shareholders’ Agreement. This interpretation is not only consistent with

the express language used by the drafter, Trivett, and accepted by the sole

signatory to the agreement, Nies, but also with the objective manifestation

principles of contract interpretation as set out in our state’s jurisprudence.

C. Nies’ Other Assignments of Error are Resolved by Proper
Interpretation of STA

Our resolution of the assignment of error regarding the trial court’s

interpretation of the share transfer agreement resolves Nies’ remaining

challenges. Nonetheless, for the sake of completeness and transparency, we

briefly address them and explain why that is so.

Nies contends that “the trial court erred in entering judgment against Nies

and his marital community.” However, this assignment of error rests on his

contentions that the trial court erred when it denied his summary judgment motion

and the final judgment was not supported by substantial evidence. 9 Again, we will

9 We separately note that Nies abandoned this assignment of error as he failed to offer any

citation to the record or legal authority. The three conclusory sentences he presented in his brief
to support this contention are insufficient to satisfy the requirements of RAP 10.3(a)(6).

• 22 - No. 87723-2-I/23

not review the denial of summary judgment after a trial, and despite the trial court’s

erroneous interpretation of the STA, entry of judgment here was proper. The trial

court determined that because the STA, which it incorrectly read as a complete

“Waiver of Liability” as set out in the findings and conclusions, was void as against

public policy and entered judgment against Nies on that basis. However, the

propriety of the judgment entered here is unchanged by our contrary interpretation

of the STA. This is so because, when viewed properly as relieving Nies of only his

obligations under the Shareholders’ Agreement, the STA does not operate to

shield him from liability for breach of his fiduciary duties to CDI.

Nies also asserts that the trial court erred when it granted him an offset for

the value of the shares he transferred back to CDI because once “the trial court

voided the transfer of shares as against public policy, there could be no setoff, as

the trial court concluded as a matter of law that Nies still owes the CDI shares in

question on public policy grounds.” While the parties devote much of their briefing

on this issue to the scope of the trial court’s authority to fashion equitable remedies,

which include offsets, and the application of the invited error doctrine, in light of

our conclusion regarding the interpretation of the STA, we need not consider such

argument. Because the share transfer agreement, by its plain language, released

Nies only from his obligations under the Shareholders’ Agreement, it had no effect

on his liability for breach of his fiduciary duties to CDI. As such, the trial court’s

reasoning for deeming the STA void as against public policy does not stand, and

Nies is correct, albeit for reasons other than those he offered, that it was error for

• 23 - No. 87723-2-I/24

the trial court to grant him an offset on that basis. 10 We remand for the trial court

to strike the offset from the judgment.

III. Failure To Award CDI Interest on Loan

In its cross appeal, CDI avers that the trial court further erred when it

declined to award as part of its damages the interest on the loan it took to pay the

back taxes owed along with the resulting interest and penalties because “all of the

evidence needed to calculate the $483,565.66 in interest recoverable by CDI was

before the [t]rial [c]ourt” and the trial court’s finding regarding its “inability to parse

that figure is therefore not supported by substantial evidence.” Nies contends that

CDI failed to meet its burden “to show that the trial court’s determination of

damages was outside the range of the substantial evidence in record.” We agree

with CDI.

We do not “disturb a damages award unless the award falls outside the

range of substantial evidence in the record, shocks the conscience of the court, or

appears to be the result of passion or prejudice.” Currier v. Northland Servs., Inc.,

182 Wn. App. 733, 751, 332 P.3d 1006 (2014). When “some findings are actually

conclusions of law or mixed findings of fact and conclusions of law,” we review “the

factual components under the substantial evidence standard and the conclusions

10 Nies also argues in briefing that while he expressly sought an offset in his amended

answers and affirmative defenses, he abandoned that contention at trial. Independent of the fact
that we are prevented from reviewing this argument by his failure to provide the report of
proceedings from trial, the court expressly found in E-8 that “Mr. Nies asks for “setoff” (i.e., an
offset) of the value of shares transferred to CDI under the Transfer of Shares to Corporation
document.” Because that finding is abandoned based on Nies’ failure to provide an adequate
record and apply or argue the relevant standard of review, it is a verity on appeal. See Jensen,
165 Wn. App. at 105.

• 24 - No. 87723-2-I/25

of law, including those mistakenly characterized as findings of fact, de novo.” In

re Est. of Haviland, 162 Wn. App. 548, 561, 255 P.3d 854 (2011).

Here, the trial court entered the following findings of fact and conclusions of

law addressing the issue of damages:

1. Since CDI would have otherwise paid taxes and
   

   withholdings it owed as they became due, the damages proximately
   caused by Mr. Nies breach are those that can be attributable to the
   breach. This includes investigation expenses, interest, penalties,
   late fees, attorney fees spent on negotiating with the IRS and CRA,
   that are directly attributable to the failure to pay because these
   damages are a foreseeable result of non-payment. On the other
   hand, the principal amount owed to the IRS or CRA are not damages
   proximately caused by Mr. Nies’s breach because CDI would have
   been responsible for those taxes without the breach.

2. Fees and expenses spent to refinance the debt owed for
   the taxes is more difficult to justify. CDI needed to refinance the debt
   to avoid liens and maintain business, but there was also testimony
   that CDI consolidated other debts into this refinance. This [c]ourt is
   not able to parse out the amount of fees and interest owed on the
   “refinanced” debt that is attributable to Mr. Nies’ breach. As such,
   the [c]ourt is not awarding that.

(Emphasis added.) CDI contends that these findings are not supported by

substantial evidence because the trial court admitted the exhibit it offered to

address the “share of the total loan that is attributable to [Nies’] breaches, which

defines the share of the principle for which interest payments are recoverable.”

We first must separate these mixed findings and conclusions. Critically

here, the trial court’s statement that it was “not able to parse out the amount of

fees and interest owed on the ‘refinanced’ debt that is attributable to Mr. Nies’

breach,” is not a finding of fact. A “fact” is “an actual or alleged event or

circumstance, as distinguished from its legal effect, consequence or

interpretation.” BLACK’S, supra, at 732. In order to determine the facts of a given

• 25 - No. 87723-2-I/26

case, the factfinder must “weigh the evidence and draw reasonable inferences

therefrom.” Noll v. Special Elec. Co., 14 Wn. App. 2d 230, 237, 471 P.3d 247

(2020). As to evidence generally, the factfinder “‘alone passes on a witness’s

credibility and measures the weight of the evidence’” in reaching its determination

of facts. In re Est. of Muller, 197 Wn. App. 477, 486, 389 P.3d 604 (2016) (quoting

In re Est. of Palmer, 145 Wn. App. 249, 266, 187 P.3d 758 (2008)). Here, the court

could have concluded that as a matter of law, CDI failed to satisfy the relevant

evidentiary burden to prove the amount of interest attributable to Nies’ conduct or,

more specifically, find that its proffered evidence was not credible. However, the

court merely noting its inability to follow the figures provided in evidence that it

otherwise appeared to find credible is not a finding of fact.

CDI’s briefing clearly identifies exhibit 267 as the evidence it offered to

prove this portion of its claimed damages. Exhibit 267 documents the total amount

of money CDI borrowed, the portion of that loan that it used to pay to

“Costs/Disbursements related to IRS/Revenue Canada,” and provides specific

calculations regarding the interest on only that portion of the loan, which is

calculated to be $483,565.66. Further, exhibit 267 contains subsequent pages of

supporting records and data to establish the figures contained on the first page.

Exhibit 267 is set out in CDI’s amended exhibit list, thus, the court had access to

the necessary information to “parse out” only that interest directly attributable to

the portion of the loan used to address the consequences of Nies’ actions.

The court did not conclude that CDI could not establish entitlement to the

interest it paid on the portion of the loan used to pay the back taxes, interest, and

• 26 - No. 87723-2-I/27

penalties as a matter of law, nor did it find that the evidence CDI offered in support

of that aspect of its claim for damages was not credible or insufficient. It simply

noted that it was unable to follow the math and declined to award that amount on

that basis. Trial courts have broad discretion to award damages provided that they

fall within the range of evidence in the record and do not “shock[] the conscience”

or result from “passion or prejudice.” Currier, 182 Wn. App. at 751. “If it be the

duty of the court [to assess the question of damages after trial], then it necessarily

follows that the failure to do so is an abuse of direction.” State ex rel. Brown v.

Superior Court for King County, 190 Wash. 572, 575, 69 P.2d 811 (1937). Thus,

we remand for the trial court to engage with exhibit 267 and the parties’ briefing

presented on reconsideration and amend the final judgment accordingly.

Affirmed in part, reversed in part, and remanded for the trial court to strike

the award of offset to Nies, calculate and award as damages the portion of CDI’s

loan interest attributable to harm caused by Nies based on the evidence already

before the court, and correct the judgment consistent with this opinion.

WE CONCUR:

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